Mark R. Fuller and Jacqueline R. Fuller v. Equitable Savings and Loan Association, an Oregon Corporation

The Fullers purchased a residence and sought to assume the seller’s existing loan. The lender insisted that the interest rate on the loan be increased two percent as a condition to permitting the purchasers to assume. The purchasers brought a suit for breach of contract, alleging that the due-on-sale clause in the deed of trust afforded them the option of paying an assumption fee of two points in lieu of the increased rate of interest. The district court held that the due-on-sale clause permitted the bank to require the increase in interest rate. We affirm.

The deed of trust provides that the lender will waive the due-on-sale clause if the following four conditions are met:

The Fullers contend that clause (4) allows the assuming purchaser, rather than the lender, to choose whether to pay the assumption fee or the higher interest rate. The district court found that the clause was not ambiguous and that it allowed the lender to choose between the assumption fee and higher interest rate.

The interpretation of a written contract is a question of law. See Transport Indemnity Co. v. Liberty Mutual Ins. Co., 620 F.2d 1368, 1370 (9th Cir.1980). In a diversity case, this court will not…